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Franchise fee dispute between city and Clean Water Services settled

At issue was payment of franchise fees by the storm- and wastewater services agency; city agrees to contribure $507435.

A long-running dispute between the city and the Clean Water Services over franchise fees the city had been collecting from the Washington County agency that provides storm- and wastewater services has been settled.

On June 6, the Sherwood City Council signed off on a settlement agreement regarding a so-called "right-of-way" fee the city has been collecting from Clean Water Services for the last seven years.

That fee, also known as a franchise fee or privilege tax, has been required of all utility providers operating in the city since the council passed an ordinance in 2008.

The settlement calls for the city to contribute $507,435 from its sanitary sewer fund to Clean Water Services, money that will be used to help pay for the Onion Flats Project. That project, which has already been completed, involved upgrading and realigning an estimated 5,300 linear feet of 18-inch concrete pipe next to or underneath Rock Creek within the Tualatin River National Wildlife Refuge.

"We've come to an agreement both looking forward and looking backward," Sherwood City Manager Joe Gall the day before the council meeting.

Also passed during the June 6 meeting was an amended intergovernmental agreement resolution spelling out future right-of-way fee language, acknowledging that cities can collect such fees of up to 5 percent and that Clean Water Services will incorporate Sherwood fees as part of its sewer and storm water management fees.

Since it was adopted in 2008, the city's right-of-way fee has been 5 percent for all utility providers. Gall said the cities of Hillsboro and Beaverton have approved, or will soon approve, similar intergovernmental amendments, noting that Sherwood has every legal authority to collect such payments.

Sherwood began withholding the right-of-way fee on behalf of Clean Water Services on July 1, 2010, and has collected $894,930 that has been placed in its general fund, said Gall.

However, the $507,435 contribution to Clean Water Services will come from the city's sanitary sewer fund and not its general fund, the latter of which pays for funding major city services and employee salaries.

The city and Clean Water Services have been trying to work out an agreement for several years. Most recently, Mayor Krisanna Clark had met with Clean Water Services representatives in January 2016 and both parties later held mediation sessions that produced no resolution.

Gall told councilors that the mediation process had been difficult at times.

"If we didn't come to terms we would probably still be going down the litigation route," said Gall.

A rate increase had been a point of contention during the November 2016 mayoral race when the campaign of Gail Cutsforth sent out a letter warning of a temporary $6 to $8 per month rate increase beginning in January 2017 and continuing until the Clean Water Services debt was satisfied.

A Clean Water Services spokesman at the time denied such an increase was planned for that time frame and the settlement agreement bars the agency from raising its rates for Sherwood customers in order to recoup amounts the agency may claim to be still in dispute.

Clean Water Services serves 570,000 customers in Washington County and surrounding area.

"Clean Water Services is pleased we were able to work with the city to resolve this long-standing issue to our mutual satisfaction," said Mark Jockers, spokesman for Clean Water Services, the day before the settlement was approved.